Video games giants accused of doing what everyone else would do and saying yes to free money

The Guardian has followed up a report from TaxWatch UK in which found Rockstar North, part of Rockstar Games and a subsidiary of Take-Two Interactive, had not paid any corporation tax in the UK.

Further investigation by the newspaper has revealed that Warner Bros, which owns UK studios Rocksteady and Travellers Tales, has claimed £60m in tax relief, with Sony and Sega pocketing £30m and £20m respectively. “Close to half of all the relief went to four large foreign-based companies. Scores of games that have few, if any, apparent British cultural references have been awarded large rebates,” they report.

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None of the companies have done anything illegal, they have simply applied for and were given tax breaks as they met certain criteria. Applicants to this fund have to meet a total of 16 points out of 31 to be eligible for tax relief, and you can see the full list of requirements below.

Section A – Cultural content
A1 Set in the UK or an EEA state or (Up to 3 points will be awarded for set in an undetermined location) Up to 4 Points
A2 Lead characters British or EEA citizens or residents (or characters from an undetermined location) Up to 4 Points
A3 Video game based on British subject matter or relates to an EEA state or underlying material 4 points
A4 Original dialogue recorded mainly in English language or one of six UK indigenous languages Up to 4 Points
Section B – Cultural contribution
B Video game represents/reflects British creativity, British heritage or diversity Up to 4 Points
Section C – Cultural hubs
C1 At least 50% of the conceptual development or storyboarding or programming or design takes place in the UK 2 points
C2 At least 50% of the music recording or audio production or voice recording takes place in the UK 1 point
Section D – Personnel
D1 1 of the 3 lead project leaders is an EEA citizen or resident 1 point
D2 1 of the 3 lead scriptwriters is an EEA citizen or resident 1 point
D3 1 of the 3 lead composers is an EEA citizen or resident 1 point
D4 1 of the 3 lead artists is an EEA citizen or resident 1 point
D5 1 of the 3 lead programmers is an EEA citizen or resident 1 point
D6 1 of the 3 lead designers is an EEA citizen or resident 1 point
D7 At least 1 of the 7 key HoDs is an EEA citizen or resident 1 point
D8 At least 50% of the development team are EEA citizens or residents 1 point
Total 31 points

 

It seems that many games are qualifying for the breaks the development team are are EEA citizens, the game is set in a fictional location, and almost all games have dialogue recording in English.

For example, Rocksteady created Batman: Arkham Knight here in London so all the leads are resident, Gotham is a fictional location, and the dialogue is English. That would score 17 points making one of the most American heroes in existence a British icon who qualifies for tax relief. The problem here is not with Sony, Warner Bros, or Rockstar, it is that the qualification rules are very loose.

The head of UKIE, Jo Twist, said the relief had “played an important role in making the UK one of the best places to make games in the world,” and the scheme was also backed by the British Film Institute.

Statistics released by the government do show there were over 300 claims from  smaller developers which were paid out.

Source: The Guardian / Gov.uk

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News Editor, very inappropriate, probs fancies your dad.

3 Comments

  1. Why does “TaxWatch UK” sound instantly dodgy to me?

    Turns out one of it’s directors (and the original funding source) was Julian Richer. Who effectively sold 60% of Richer Sounds to his employees earlier this year, for £9.2m. And wouldn’t have had to pay any tax on that £9.2m, so avoiding £1.84m in tax.

    Ok, so he does appear to pay his employees well, and gave £3.5m of his own money as a bonus. But it does seem a bit off from them to criticise anyone else for accepting whatever money they can get while taking money from someone who did exactly that.

    • Now, that is interesting isn’t it?

      It’s almost like our taxation system is set up to benefit the richest rather than the poorest. But that can’t be right can it?

      • No, that can’t be right. If it was, they’d look bad and have to find excuses to try and accuse everyone else of not paying enough tax. That’s the sort of shenanigans that leads to Brexit.

        The original fuss they made was about Rockstar claiming £42m in tax relief. GTA5 sold a lot of copies. £94m in it’s first week all those years back. That’s £15m in VAT in that first week. I think by now the government has more than made it’s £42m back from the VAT.

        Selling £9.2m of your company and avoiding tax on it is just £1.8m of tax gone missing. Ok, so then the employees he sold it too will then pay some tax. At a lower rate than he would. When they can afford it less than he can. With a much higher chance of getting into trouble if they don’t pay.

        So yes, have a go at Rockstar (and the new set of companies they’re going after). That sounds reasonable.

        No, it doesn’t. I was being sarcastic. The whole system’s fucked, isn’t it?

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